Yuga Labs, the developer of the popular Bored Ape Yacht Club (BAYC) NFT collection, is collaborating with LSLTTT Holdings, the founder of Pudgy Penguins, to combat the unauthorized trading of their NFTs on markets that disregard the copyright of creators, such as OpenSea and Blur.
According to one developer, 0xCygaar on X, “Yuga Labs is criticizing the increasingly prevalent actions in the industry that do not respect the copyright of NFT creators. Yuga Labs intends to restrict markets that disregard the copyright of creators, such as OpenSea and Blur.” Instead, the Bored Ape Yacht Club NFT collection will only be available on decentralized markets like SudoSwap V2 and X2Y2.
In NFT transactions, copyright fees are paid to the creator based on a percentage of the sale price. This means that artists like Yuga Labs or LSLTTT Holdings earn a portion of the profit each time their artwork is resold.
During minting, creators set the copyright fee, which can be a percentage of the resale price or a fixed amount per resale. Copyright fees typically range below 5%, but this percentage can vary. These fees are automatically paid to the creator through the NFT market where the artwork is sold.
Copyright fees not only serve as a way to honor the creators but also provide them with additional resources to invest in higher-quality products.
Previously, Yuga Labs had earned over $147 million from copyright fees on secondary sales of its various projects, based on data collected by Galaxy Digital in October 2022.
However, OpenSea and Blur have reduced copyright payment amounts to cope with the downturn in activity over the past few months as NFT trading volumes rapidly declined. As a result, a series of initiatives aimed at reviving investor activity in NFT trading were implemented by OpenSea and Blur.
According to Nansen, an analytics platform, the average copyright payment rate as of July 2023 is only 0.6%, a significant decrease from 2.5% in the same period of 2022. The decline is mainly attributed to the Solana NFT space, where nearly all secondary sales transactions take place on platforms that either reject creators’ copyrights or turn them into options for traders. Magic Eden, for example, has shifted to a model offering NFT copyright fees as options. For Ethereum, markets like LookRare, X2Y2, Blur, and Sudoswap have also adopted a similar approach.